Personal finance question...401k and car payments

G

gnahc79

New member
Is it better to not do a 401k contribution and have it help accelerate my car payments? Let's assume the following:



5 yr term (1.5 yrs paid so far) at 4.84% APR

27 yrs old, married no kids with $50K in my 401k + an ok corporate pension + small amount in mutual funds



I can pay off my car quite a bit faster if I push my 401k contribution to it. Is it a stupid move since I don't get the tax break? I'm trying to go to wipe out all of my debt to prepare for getting a house.
 
this depends entirely on how staedy your employement is.



I would never stop 401k all together, but you've got a great head start.



I would cut it to a minimum since you have so much now,





or stop the mutual fund contribution for a while, keep the 401k going, and use the mutual fund contribution to pay down the car.





do you have ANY creditcarddebt?
 
I'm wiping out all of my credit card debt (0% intro rate card deal) within a month or so from taking a capital loss on my mutual funds. sigh.

Oh, my employment is steady.



edit: for matching, it's "50 cents for every before-tax dollar you contribute, up to the first 6% of your eligible pay in a pay period, subject to IRS limits."
 
No way – do not pass on your 401(k). Your car payment is peanuts in the grand scheme of things. As a matter of fact, you should increase your pre-tax contribution to realize the full benefit of your employer’s match. You do the math. Pay down your debts as best as possible (minus car) and put aside money for a down payment on a home. Your home will appreciate over time and provide an annual tax return. The car does not. Don’t let debt discourage you from owning a home. Again, maximize your 401(k) contribution and forget about the car. Good luck ;)
 
Knockwurst said:
No way – do not pass on your 401(k). Your car payment is peanuts in the grand scheme of things. As a matter of fact, you should increase your pre-tax contribution to realize the full benefit of your employer’s match.
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Completely agree. Missing out on contributions will be detrimental in the long run and you'll only have to contribute that much more on top the contributions you'll be making when you start again to try to make up for lost time in the market. But if you were normally maxing it out every year, then you can't make up for it unless you do something on the side like in a ROTH IRA (and you lose the tax benefit of pre tax dollars removed for your 401k contribution).
 
Without a match I wouldn't take a loan out on my 401K to buy the car, which is what you are really doing. But you get an IMMEDIATE 50% return on your 401 K. The stock market can't do that consistently. I listen to a guy on the AM radio named Dave Ramsey. Check out www.daveramsey.com for a basic no nonsense appraoch who doesn't agree with any loans except for 15 year house loans.
 
az57chevy said:
Without a match I wouldn't take a loan out on my 401K to buy the car, which is what you are really doing. But you get an IMMEDIATE 50% return on your 401 K. The stock market can't do that consistently. I listen to a guy on the AM radio named Dave Ramsey. Check out www.daveramsey.com for a basic no nonsense appraoch who doesn't agree with any loans except for 15 year house loans.
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Ramsey is the man, on his plan you would not have a car note in the first place. I have lived by this "cash only" plan for a long time, but found Ramsey about a year ago.



Either way, IMO you are asking the right questions and have a great head start on your retirement, GOOD LUCK!!! :up
 
Definitely do not stop your 401K contributions. If your company is offering to match 50% of the first 6% of your salary it's like they're offering you a 3% raise.
 
another vote for the 401K



Its free money, the money you put in now at your young age is the base that will appreciate the most and make your later years much easier. This way you wont be eating cat food so you can Klasse SG your hover car, yea it will still be around in 30 years and so will the How Do I remove SG threads.....



You cant rely on that pension either, the company I work for has the highest priced stock in the world and it has been for a long time, see if anyone can guess who that is?. They are about to announce that all people hired after next month will not recieve a pension. I am betting the people who have been here for years are about to lose it too, unheard of a few years ago but now it seems inevitable.



Save that 401k, put in as much as you can, act as if its all you will have because it just might be... I'm not working for a company in trouble either, we make a lot of money and are considered the gold standard in what we do.



I kid you not I started using this website...slickdeals.net and just using the coupons and incredible deals people post. cheapness is a quality I never was known for but after being on that site a few months I have really cut down my spending. I cant describe that forum other than to say its like Autotpia for cheap people.As a strange example I now buy gas only on those days I get 7 cents off etc....



Last month I got two free Ipod shuffles, started an ING direct account that sweeps unneeded money out of my checking account and gives me 3.8% interest and they gave me a $50 sign up bonus. Its amazing how much you can save when you really try.



I figure with the cost cutting I have done in the past 6 months I have made 3 car payments, not bad when im paying for a 2003 BMW I bought new (IE my payments are insane).



This Christmas I probably saved 50-60% on alll my gifts using their forums. Fatwallet.com is another great forum to turn you into a cheapskate.



Save save save......
 
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